US air trade: When will normal air trade return?

A number of U.S. economic indicators have been showing improvement, but air freight volumes continue to show year-on-year declines. July airfreight export volumes declined by 17%, and imports by 8%. If the effect of pandemic-related products were excluded, imports would have declined by 15%. For the first seven months of 2020 exports are down 16%, while imports are down 4%, or 10% if excluding the effect of pandemic-related products. While the rate of decline on the export side appears to be diminishing, imports are still posting large YoY declines, though not at the levels seen in April and May.

Figure 1 – US air trade Jan. – July 2020, tonnage growth  

Meanwhile, a number of economic indicators relevant to air freight point toward expansion:

• Manufacturing Purchasing Manager Index (PMI) has pointed to month-on-month growth, with the forecast for the coming two quarters pointing to continued moderate expansion.
• Business confidence in July increased for the third month in a row.
• Retail sales also increased for the third consecutive month in July and now are up 2.7% YoY.
• Trucking tonnage volumes continue to grow, although most of this growth is in the spot, not contract, market.

So far, however, this improvement has been insufficient to give air freight a real boost. As business investment continues to be held back and inventory remains elevated, air freight has not been able to stage a comeback. On a product level, the picture for July was similar to previous months: Pandemic-related traffic continues to be strong, but traditional air cargo like capital equipment and parts, raw materials and automotive supplies continue to perform poorly. Computers, mobile phones and semiconductors, however, have been doing well for a number of months now, even posting YoY growth.

Figure 2 – Air export and import performance by commodity, July 2020

Apparel and footwear appear to be up substantially, but this segment currently primarily consists of personal protective equipment (PPE).  In July, these types of products accounted for almost 15% of overall tonnage, and 25% of China-U.S. air freight import tonnage.

Figure 3 – US air freight imports of COVID-19 medical supplies to July 2020